Young adults between 18 and 21 years old have traded $5.4 billion on the prediction market platform Kalshi this year, according to a CNN analysis. This activity occurs despite these individuals being too young to legally gamble on sportsbooks, which typically require users to be 21 or older.
Kalshi allows users to speculate on a wide range of future events, from entertainment outcomes to geopolitical developments. However, sports-related wagers, including parlays, constitute 80% of Kalshi's overall trading volume. The analysis found that users in the 18-21 age bracket accounted for approximately $3.9 billion of this sports and parlay volume.
Critics argue that prediction markets like Kalshi function as a loophole for underage gambling. Because these platforms are regulated as financial markets, they are accessible to individuals 18 and older, unlike traditional casinos and sportsbooks. Concerns have been raised that this early exposure to prediction markets could negatively impact the investment habits of Gen Z, a demographic noted for its early engagement with financial markets.
Kalshi, which holds an estimated 90% of the U.S. prediction market share, has implemented some safeguards for younger users, including deposit limits and warnings for risky behavior. The company also announced a $2 million donation to the National Council for Problem Gambling earlier this year.
Despite these measures, industry groups and sports organizations are pushing for regulatory changes. The American Gaming Association, representing the casino industry, contends that prediction sites operate as unlicensed sportsbooks. They are actively involved in legal efforts, alongside Native American tribes and 44 state attorneys general, to alter the regulatory framework. The NCAA, NFL, NBA, and PGA Tour are among the sports leagues that have urged the Commodity Futures Trading Commission (CFTC) to raise the minimum trading age on these platforms to 21.
Proponents of prediction markets counter that 18-year-olds are legally permitted to trade on stock markets and engage with other CFTC-regulated markets. Some smaller prediction markets have voluntarily opted to ban users under 21, such as the recently launched Fanatics prediction site.
Kalshi has experienced significant growth, with over $173 billion in overall trading volume year-to-date as of last Friday, according to Paradigm, a major investor in the company. Users aged 18-21 represent 3.14% of this total trading volume, a Kalshi spokesperson confirmed to CNN.
Experts anticipate continued high engagement from young people on prediction platforms, particularly with major sporting events like the World Cup and the upcoming football season. Jonathan Michaels, who leads a gaming industry consulting firm, noted that such events often drive increased activity, which tends to extend to college-aged students.